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If you have not yet gotten around to creating a will or discussing the future with your family, you need to keep a few things in mind before starting your Wisconsin estate planning. Numerous pitfalls could trip you up in your goal of having things carried out in accordance with your wishes after you are gone. Whether your estate is large and complex or small and simple, you should still leave your family and friends with at least some guidance on how you want your estate distributed. Wisconsin estate planning laws are on par with the rest of the nation, neither more nor less complex, but they can be confusing if you do not know the area of law. A consultation with a Wisconsin trust and estate planning attorney is always a good idea. Before meeting with an estate planning attorney, read on to find out what you should consider when approaching estate planning in Wisconsin.
1-What is an Estate Plan?
When people think about estate planning, they typically think about one document, like a will or a trust. In reality, Wisconsin estate planning can be many different documents or legal instruments created to work together to adequately protect your estate for your heirs and beneficiaries while minimizing the financial consequences of distributing the estate. An experienced Wisconsin estate planning attorney can assess your assets and help you develop a plan to protect and distribute them after you pass away.
2-What should be included in an estate plan?
If you have a good-sized estate and need the protection of an estate plan in order to maximize gifts and minimize expenses, there should usually be five documents or instruments included in your estate plan.
Will- This is the document everyone usually thinks about when they think about estate planning. You might wonder about the importance of preparing a will to protect your estate, especially if it is not that large or you don't have many living relatives? A will is essential because if you leave anything behind after you pass away, it tells your family and the probate court what you want to be done. In your will, you can nominate a personal representative to handle the probate and give gifts to friends, family members, or organizations. You can also let the court know who you nominate as a guardian for your children if they are still underage. The importance of a will cannot be overstated. You should also update your will with any significant life change like marriage, divorce, the birth of a child, or the birth of grandchildren.
Trust -You can create a trust anytime you like, but it is a handy tool to use in estate planning. There are many different types of trust instruments. A Trust is a flexible instrument that can be tailored to meet your needs. The attractive aspect of a trust is that you fund the trust with money and property, and once those assets are in the trust, they do not need to pass through the probate process. When you pass on, they will go to the named beneficiaries by operation of law. Trusts are becoming very popular as estate planning tools. One thing to note, though, is that if you elect to put assets in a trust, you will most likely want to have a pour-over drafted to ensure that anything not in the trust is also addressed in the event of your passing away.
Advance Directives -These are essential parts of estate planning that are very simple but don't get brought up often enough. Advance directives are your living will and your healthcare power of attorney. You prepare these documents ahead of time that will empower your family or friends to make decisions based on what you want for yourself and with a lighter heart. The living will is a document that states what you want to be done if you end up in a coma, on life support, or are caught in a medical situation where you are unconscious and cannot tell your doctor or family what you want to be done, medically. A healthcare power of attorney is where you designate a party you trust to make healthcare decisions when you are unconscious or otherwise non-verbal. A healthcare power of attorney is considered under the law as a durable power of attorney in that it allows someone to make decisions for you if you are incapacitated.
Financial POA- The financial power of attorney is the document where you select a party to be in charge of ALL of your finances should you become incapable of doing so for yourself. A vital factor to consider is that typically, although you may feel inclined to select a family member to be your financial power of attorney, it is not always the best decision. Fights can occur as other family members disagree with a decision or believe that the designated family member is taking advantage of the powers granted in the healthcare power of attorney. A non-interested party would be a good choice for the financial power of attorney. One example will be your attorney if they agree to handle that duty for you. The financial power of attorney will expire upon your death.
Marital Property Agreement-Typically seen in divorce cases, marital property agreements are also used in estate planning. A marital property agreement can be created before or after the parties are married. What the agreement does is make clear what property is marital and what property is individually owned. Marital property agreement is beneficial when one spouse passes away. It helps clarify what property is part of the deceased spouse's estate and how it should be disbursed. If you are in a marriage where one or both of you have children from a previous marriage, you should undoubtedly have a marital property agreement as part of your estate plan.
3-What If I Don't Have a Will?
You should have a will, even if it is a short, simple document. You may be wondering what the importance of having a will to protect your estate is. If you do not have a will when you pass away, you die "intestate," legally speaking. If a party dies intestate, the court will rely on specific rules and procedures in order to divide your estate. The court will rely on the rules of kinship in order to determine who gets a portion of your estate. What that means is the court will look at the ties of blood (your family) and law in order to determine where the property goes. If you die intestate with a spouse, it will go to the spouse. If you do not have a spouse, it will go to your children and so on. The court will continue to search for any family members you have to give your property to if you die intestate. In the rare occurrence that you do not have any living relation by blood or marriage, the court can hand the property over, and the property will be escheat to the state. In other words, the state gets to keep your property.
4-What Is the Probate Process?
Once a death is confirmed, the executor of the will usually hires an estate attorney to petition the court to open probate. Probate is essentially proving that a will is legitimate and provides a structure for the orderly payment of debts and the disbursal of gifts to the named beneficiaries. The estate attorney is typically paid out of the estate. The estate will be inventoried and valued. Debts will be paid to creditors who submit claims on time. The remainder of the state will then be distributed to the named parties according to the terms of the will. The probate is closed once all is accounted for, all issues resolved, and property is disbursed. Many states do offer an informal probate process for estates that are $50,000 or less in value. While the probate court will oversee things generally, it is a less complicated procedure that a party can complete on their own, without involving an attorney if they do not want to.
5- The Issue Of Estate Tax
The state of Wisconsin stopped requiring estate tax as of January 1, 2008. Prior to January 1, 2008, estates were taxed. Wisconsin is currently one of 38 states that do not impose an estate tax. Wisconsin also does not have an inheritance or gift tax. One issue to note is that if you live outside of Wisconsin, in a state that does impose taxes, you will most likely be required to pay a home state tax on assets you receive from the state of Wisconsin. If this situation occurs, the best option for you is to consult with an attorney licensed in your home state. Hence, there is no confusion, and you have reasonable expectations about what you will receive.
There is a federal estate tax on extensive estates only. As of 2022, the federal estate tax only applied to estates that had a gross value of $12.6 million or more.
6-Trusts and Other Instruments That Can Be Used in Estate Planning
We touched briefly on trusts earlier in the article. There are so many different types of trusts and ways to use them they cannot all be covered here. It is sufficient to say that trust is a very flexible and helpful tool in estate planning. The most popular type of trust, the revocable living trust, holds property and money for its beneficiary, which could also be its trustee. The significant aspect of having one or more trusts in place is that while they pay more attention than a will, the assets held in the trust do not have to go through probate. If you were to pass on, the trust could be designed to begin passing assets to another trustee simply, and there would be no need for probate, which can be time-consuming.
A few other often used instruments in estate planning are payable on death accounts (POD) and transfer on death accounts. These accounts have a named beneficiary that automatically gains access to the account upon the creator's death. These accounts have their own pros and cons, so if you are interested in one, it is best to discuss it with your estate planning attorney to discover if they are right for you. Other estate planning tools can include life insurance and letters of intent.
The best plan is to meet with a Wisconsin estate planning attorney early before you become sick or are advanced in age. Your health and state of mind when you create your estate plan and its documents can play a part in many contests to your will or trust that you create. Planning carefully while you are healthy and in absolute control of yourself is the best option for your wishes to be carried out after you are gone. If you are thinking about starting your estate planning process, feel free to give the Wisconsin estate planning attorneys at O'Flaherty Law a call, we would be happy to help you.
What to Expect From a Consultation
The purpose of a consultation is to determine whether our firm is a good fit for your legal needs. Although we often discuss expected results and costs, our attorneys do not give legal advice unless and until you choose to retain us. Although most consultations are complimentary, some may carry a charge depending on the type of matter and meeting location.